2010 Deutsche Bank Small and Mid Cap Conference. February 8, 2010

Transcription

1 2010 Deutsche Bank Small and Mid Cap Conference February 8, 2010

2 Safe Harbor Forward-Looking Statements This presentation contains certain forward-looking information within the meaning of the Private Securities Litigation Reform Act of The words believe, expect, anticipate, estimate, target, and similar expressions, among others, identify forward-looking statements. All forward-looking statements are based on information currently available to management. Such forward-looking statements are subject to certain risks and uncertainties that could cause events and the Company s actual results to differ materially from those expressed or implied. Please see the disclosure regarding forward-looking statements immediately preceding Part I of the Company s Annual Report on Form 10-K for the fiscal year ended October 31, The Company assumes no obligation to update any forward-looking statements. Regulation G This presentation includes certain non-gaap financial measures that exclude restructuring and other unusual charges and gains that are volatile from period to period. Management believes the non-gaap measures provide a better indication of operational performance and a more stable platform on which to compare the historical performance of the Company than the most nearly equivalent GAAP data. All non-gaap data in the presentation are indicated by footnotes. Tables showing the reconciliation between GAAP and non-gaap measures are available at the end of this presentation and on the Greif Web site at 2

3 Greif s Profile Founded in 1877 as a packaging company Initial public offering in 1926 Diversified business platform Leading industrial packaging company with over 30% global market share Approximately 200 operations in more than 45 countries 3

4 Diversified Business Platform (Dollars in millions) 2009 Net Sales 2009 Operating Profit (1) $2,792 $313 $505 $20 $59 $22 $2,267 $232 Industrial Packaging Paper Packaging Land Management Net sales Operating profit 81% 74% 18% 19% 1% 7% 100% 100% (1) Before restructuring charges, restructuring-related inventory charges and timberland disposals, net. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. 4

5 Performance Trajectory (Dollars in millions) CAGR Net Sales $964 $2,792 13% Operating (1) $89 $313 15% Profit March 2, 2001 March 4, 2003 September 22, November 30, 2006 Launched 2006 Acquired Van Leer Acquired steel drum and Transformation to Industrial Packaging Acquired Delta closure businesses of Greif Business System from Huhtamaki for Petroleum for $98 Blagden Packaging for $555 million million 205 million September 30, 2003 Remaining interest in CorrChoice obtained (1) Before restructuring charges, restructuring-related inventory charges and timberland disposals, net. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. 5

6 Strategy Statement Continue to strengthen the core > Industry consolidation > Emerging markets > Product line extensions Optimize and embed the Greif Business System throughout the enterprise to achieve top quartile profitability and lowest cost producer status while enhancing safety and quality. Pursue adjacencies. Emphasize sustainability in all of the company s activities to meet or exceed our stewardship responsibilities as a global citizen, and create long-term competitive and shareholder advantages. Fix, sell or close underperforming assets. 6

7 Our Aspirations Preferred productivity partner Compelling value proposition based on what customers are willing to pay for Low-cost provider of high-quality products with consistent and reliable delivery Growth Top-quartile performance metrics Top-quartile performance Organic growth: 5.0% Organic growth: 5.0% Operating profit margin: 12.5% Operating profit margin: 12.5% SG&A to net sales: 7.5% SG&A to net sales: 7.5% OWC to net sales: 7.5% OWC to net sales: 7.5% RONA: 25.0% RONA: 25.0% Value People Productivity Strong performance ethic Strong performance ethic Transparent governance Transparent governance structure structure Performance management Performance management Talent and succession Talent and succession management management Productivity imperative Real-cost productivity: ty 4% %per year Capital productivity Asset turns: 2x World-class strategic sourcing capabilities Note: Performance metrics over a complete business cycle. 7

8 Greif Business System Holistic Approach Operational Excellence Commercial Excellence Global Sourcing and Supply Chain Working Capital Key Overall Equipment Pocket Margin Identify key suppliers Fully integrated Effectiveness (OEE) and source raw global cash Account Management material requirements management 5S (Sort/Set in effectively system Order/Shine/Standardize Value Selling / Sustain) Elements (Partial list) Line Balancing Visual Management Value Stream Mapping Channel Management Performance Management Reduce raw material price volatility Achieve orderly deliveries Aggressively pursue direct and indirect cost savings Strong credit approval process Automated tools to manage and monitor cash requirements GBS diagnostics have identified approximately $100 million of additional cost savings. 8

9 Industrial Packaging (Dollars in billions) Net sales Served markets $3.1 Lubricants, Oils $3,200 $2.3 and Additives $2, CAGR $1.3 $2.3 9% $2.7 $2,400 $2,000 $1,600 $1,200 $2.0 $1.8 $1.6 $1.3 $ Agriculture Pharmaceutical Chemicals Operating profit margin (1) Competitive advantages Leading market position Growing global footprint Compelling value proposition Comprehensive product portfolio Strong customer relationships (1) Before restructuring charges and restructuring-related inventory charges. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. 9

10 Most Comprehensive Industrial Packaging Portfolio Global Presence Steel Plastic Fibre Intermediate Bulk Containers Closures #1 #2 #1 #4 #1 Mauser Schutz Greif s global market share exceeds 30% 10

11 Paper Packaging (Dollars in millions) Net sales Served markets CAGR $324 $505 7% Automotive Building Products Food Packaging Operating profit margin (1) Competitive advantages Customer focus Integrated containerboard network Highly efficient sheet feeder footprint (1) Before restructuring charges. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. 11

12 Land Management United States Canada Total Core Timberlands 222, ,700 Special Use Land 34,000 25,050 59,050 Total Acres 256,700 25, ,750 Land Management involves active harvesting, sale and regeneration of U.S. timber properties, Special Use (Higher and Better Use land and development land) sales, timberland management, wildlife stewardship, recreation and development. Undervalued timber portfolio with book value of $197 million at October 31, Over $225 million of timber properties have been monetized since Timber properties are located in Alabama, Louisiana and Mississippi in the United States and the Provinces of Quebec and Ontario in Canada. 12

13 Financial Review

14 Financial Profile (Dollars in millions) CAGR Net Sales $1,633 $1,916 $2,209 $2,424 $2,628 $3,322 $3,777 $2,792 8% Operating Profit (1) $ 92 $ 121 $ 155 $ 171 $ 238 $ 311 $ 413 $313 19% Net Income (1) $ 32 $ 43 $ 83 $ 96 $ 140 $ 190 $ 267 $194 29% RONA (1) (2) 7.5% 10.1% 13.3% 15.9% 21.5% 21.3% 24.8% 17.8% (1) Before restructuring charges, restructuring-related inventory charges, debt extinguishment charges, timberland disposals, net and cumulative effect of (2) change in accounting principle. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. An explanation of the calculation of RONA is included in the Appendix of this presentation. 14

15 Financial Objectives (1) (Dollars in millions) Annual Organic Sales Growth 5% Total Debt to Total Capitalization 30% - 40% Annual Dividend Payout 30% - 35% Annual Capital Expenditures $85 - $145 Spread Over Cost of Capital 7.5% - 10% (1) Over a complete market cycle. 15

16 Strong Cash Generation (Dollars in millions) Purchases of PP&E, net $81 Other $7 Operating Cash Flow $267 Free Cash Flow (1) $186 Acquisitions $91 Cash Dividends $88 33% of Operating Cash Flow Returned to Shareholders in Fiscal 2009 (1) Free cash flow = operating cash flow purchases of PP&E, net 16

17 Cash Dividends (Dollars per Class A Common Share) : 22%CAGR More than 75 consecutive years of cash dividends paid 30%-35% payout target over complete business cycle 3.1% current yield (1) (1) Based on cash dividends paid during last 12 months (February 1, 2010). 17

18 Re-earning the Right to Premium Valuation GBS a catalyst enabling strong relative performance and value creation during cyclical trough Diversity a compelling competitive advantage Strong balance sheet and access to alternate sources of liquidity Balanced focus on defense (contingency planning/ enterprise risk management) and offense Solid, experienced and performance-driven management team with record of accomplishment Diversity > Strength > Performance 18

19 Appendix

20 GAAP to Non-GAAP Reconciliation Operating Profit UNAUDITED (Dollars in millions) 2000 GAAP operating profit $ 98.2 Restructuring charges - Timberland disposals, net (9.3) Non-GAAP operating profit before restructuring charges and timberland disposals, net $

21 GAAP to Non-GAAP Reconciliation Return on Net Assets UNAUDITED (Dollars in millions) GAAP operating profit $ $ 65.4 $ $ $ $ $ $ Restructuring charges Restructuring-related inventory charges Timberland disposals, net (12.1) (5.6) (7.5) (56.3) (41.3) 0.7 (0.4) - Non-GAAP - operating profit before restructuring charges, restructuringrelated inventory charges and timberland disposals, net $ 91.9 $ $ $ $ $ $ $ Average cash (1) $ (30.8) $ (27.2) $ (36.1) $ (67.9) $ (148.9) $ (120.4) $ (101.0) $ (79.5) Average short-term borrowings (1) Average current portion of long-term debt (1) Average long-term debt (1) Average shareholders' equity (1) , ,034.9 Average net assets $ 1,230.0 $ 1,198.5 $ 1,164.5 $ 1,074.7 $ 1,105.0 $ 1,463.6 $ 1,664.8 $ 1,764.2 GAAP return on net assets (GAAP operating profit divided by average net assets) 8.2% 5.5% 9.3% 17.9% 22.3% 19.8% 22.2% 13.3% Non-GAAP return on net assets (non- GAAP operating profit before restructuring charges, restructuring-related inventory charges and timberland disposals, net divided by average net assets) 7.5% 10.1% 13.3% 15.9% 21.5% 21.3% 24.8% 17.7% (1) Amounts used in the calculation for this graph are based upon the average balances as of the beginning of the fiscal year and end of each fiscal quarter for the years presented

22 GAAP to Non-GAAP Reconciliation Operating Profit Margin by Segment Operating Profit by Segment UNAUDITED (Dollars in millions) Industrial Packaging Net Sales $ 1,268.1 $ 1,384.2 $ 1,620.8 $ 1,804.2 $ 1,993.1 $ 2,662.9 $ 3,074.8 $ 2,666.9 GAAP - operating profit $ 39.0 $ 21.9 $ 66.9 $ 91.4 $ $ $ $ Restructuring charges Restructuring - related inventory charges Non-GAAP - operating profit before restructuring charges and restructuring-related inventory charges $ 41.3 $ 69.8 $ $ $ $ $ $ GAAP- operating profit margin 3.1% 1.6% 4.1% 5.1% 7.2% 8.0% 9.1% 6.8% Non-GAAP operating profit margin 3.3% 5.0% 6.9% 6.8% 8.4% 8.6% 10.2% 10.2% Paper Packaging Net Sales $ $ $ $ $ $ $ $ GAAP - operating profit $ 20.2 $ 17.9 $ 20.6 $ 36.3 $ 50.8 $ 62.5 $ 68.4 $ 58.0 Restructuring charges Non-GAAP - operating profit before restructuring charges $ 20.6 $ 30.4 $ 29.5 $ 40.6 $ 60.0 $ 67.7 $ 77.5 $ 58.7 GAAP- operating profit margin 6.2% 3.6% 3.6% 6.0% 8.2% 9.6% 9.8% 11.5% Non-GAAP-operating profit margin 64% 6.4% 60% 6.0% 52% 5.2% 67% 6.7% 97% 9.7% 10.4% 11.1% 1% 11.6% Land Management GAAP - Operating profit $ 42.0 $ 25.6 $ 21.2 $ 64.2 $ 51.9 $ 13.7 $ 20.9 $ 22.1 Restructuring charges Timberland disposals, net (12.1) (5.6) (7.5) (56.3) (41.3) 0.7 (0.4) - Non-GAAP - operating profit before restructuring charges and timberland disposals, net $ 30.0 $ 20.3 $ 13.9 $ 8.0 $ 10.6 $ 14.4 $ 20.6 $

23 GAAP to Non-GAAP Reconciliation Net Income GAAP to Non-GAAP Reconciliation Net Income UNAUDITED (Dollars in millions) GAAP - net income $ 31.0 $ 9.5 $ 47.8 $ $ $ $ $ Restructuring charges, net of tax Restructuring-related inventory charges, net of tax Debt extinguishment charge, net of tax Timberland disposals, net of tax (7.8) (3.9) (5.7) (36.3) (26.0) 0.5 (0.3) - Cumulative effect of change in accounting principle - (4.8) Non-GAAP - net income before restructuring charges, restructuringrelated inventory charges, debt extinguishment charge, timberland disposals, net and cumulative effect of change in accounting principle $ 31.6 $ 42.8 $ 83.0 $ 96.1 $ $ $ $